Pay as you Go?

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Reform Scotland believes that a system of road pricing which charges drivers for the time, distance and location of their journey offers a fairer and better way of charging for use of our roads than the current tax regime.

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Reform Scotland recently published its report ‘Pay-as-you-drive: the road to a better future’.  The report highlights three main areas of concern with the existing motoring taxation system.
•    Increasing emissions: while other sectors are seeing a reduction in carbon emissions, transport’s contribution is increasing
•    Increasing congestion: little progress is being made in reducing congestion or increasing journeys to work by public or active transport – indeed there has been a 12% increase in traffic on Scotland’s motorways
•    Unfairness and inequality: Rural drivers filling up a Ford Mondeo pay over £10 more at the pump than urban ones, even though they cause far less congestion and have fewer public transport options

A fundamental problem is that we do not believe that the objective of current motoring taxes is clear.  Changes to the Vehicle Excise Duty (VED) rates have directly addressed carbon emission, and this is to be welcomed (although we feel that VED punishes infrequent drivers by charging them the same as frequent drivers, which our Pay-as-you-drive (PAYD) system will address).

….the main motoring tax, fuel duty, is a blunt and unfair instrument which takes no account of where and when people are using the roads

However, the main motoring tax, fuel duty, is a blunt and unfair instrument which takes no account of where and when people are using the roads.

Instead, Reform Scotland believes that there should be three clear policy objectives of motoring charges:  to reduce emissions; to cut congestion; and to increase fairness.

A Pay-as-you-drive (PAYD) system of road pricing, in which people pay depending on which roads they use and when they use them would meet this criteria and is both a fairer and more efficient way of allocating scarce road space.

Our report, ‘Pay-as-you-drive: the road to a better future’ recommends that the Scottish Government carry out a feasibility study as a first step towards implementing a national and local Pay-as-you-drive (PAYD) road pricing scheme in Scotland.  We would favour a scheme which charges motorists a variable rate for road usage depending on when and where they are driving.  This would mean that people who live in more rural areas with less access to public transport, or who have to travel during unsocial hours, would face lower costs than those using more congested roads at peak times.

Evidence from other countries shows the part that road pricing systems can play in reducing journey times and congestion while improving reliability and having a positive impact on the environment.  If a proportion of the revenues from the charging scheme went towards improvements in public transport, then this could be an additional benefit, particularly to those on low incomes who are more dependent on these modes of transport.

We believe that any scheme should be part of a completely new approach to paying for use of our roads.  As such, road charges must be a replacement for the existing methods of paying for roads through Fuel Duty and Vehicle Excise Duty and not an additional means of raising revenue.

While the Scottish Government would be ultimately responsible for the scheme and would probably price motorways and national trunk roads, we would advocate local authorities setting local road prices in their area.

…people who live in more rural areas with less access to public transport, or who have to travel during unsocial hours, would face lower costs than those using more congested roads at peak times

In the past, there has been significant public opposition to schemes of road pricing.  In part, this is because the Edinburgh congestion charge proposal, the most recent attempt to implement such a scheme, was effectively a tax rise because it would not have been accompanied by a commensurate reduction or abolition of any other motoring charge. Opinion polls tend to illustrate that while people do not support road pricing, it is more popular than the existing motoring taxation regime.  Furthermore, other schemes (such as London’s congestion charge) have found favour once they are up and running.

Whilst we recognise that a Pay-as-you-drive policy wouldn’t change everyone’s driving habits, and some may continue to behave as they do at present, it would be with a greater awareness of the costs of doing so.

PAYD has the potential to be a useful policy tool for government, allowing drivers to be charged fairly for the choices they make, and also to be charged appropriately for their impact on the road network and the wider environment.

Further, the introduction of road pricing is a good example of how greater fiscal powers could be used to introduce a different approach to a particular policy area, since these powers would be used to implement a new and better way of paying for the use of our roads.  While congestion charging schemes could be introduced using the Scottish Parliament’s current powers, this would be in addition to current UK taxes and would, therefore, be inappropriate and rightly unpopular.  Reform Scotland wants to see a fairer and more effective way of paying for road use introduced, not an additional tax.  Therefore, devolving the relevant taxation powers, as we have previously advocated under Devo Plus, must be a pre-requisite for the introduction of a Pay-as-you-drive (PAYD) road pricing system in Scotland.

It is clear that the current taxation regime is not effective at changing behaviour and will not continue to raise as much income as it currently does.  As a result, Reform Scotland believes that a fairer and more sophisticated method of charging for road space in Scotland needs to be introduced, one which can actually help change behaviour, but does not punish those without alternative options.  On top of this, technological advances since the UK Government’s feasibility study in 2004 mean that a Pay-as-you-drive road pricing scheme in Scotland is now a very viable road for the future.

Geoff Mawdsley is Director of Reform Scotland

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